First time home-buyer at 25

[Mihir Shrestha]

I am making about $140,000 a year, I have about 80k saved up, and I want to buy my own place and start house hacking. I currently live in Malden, MA and the house prices seem to hover from about 675 - 760k for a house. 

Thing is, the interest rate is about 7.66% right now and even with my credit score which is around 762, my interest rate would still be > 7%.

I'm thinking about buying a property that's 750k which is a 3bed, 1.5 bathroom with a renovated basement, and with the math, it looks like my mortgage would be around $6,000.

My thought process is that I would live in the basement so that I can rent out the 3 bedrooms for about $1,200 each with utilities included ~ yielding about $3,600 which leads me to pay $2,400 out of my pocket + 400 in utilities so around $2,800.

My question is, is this a financially sound decision? I work from home, so I don't necessarily have to live around Malden (although it would be nice to be within 20-25 mins of Boston).

Other alternatives are to just buy a multi-family house in a cheaper area like Lowell or Worchester and continue renting in Malden or to move to a cheaper location like Worchester or Lowell and live there as I work from home anyway. 

I was wondering if any one from the New England area or anyone else experienced in househacking had any suggestions? Also, is 750k a bit too much for my income? It is a 6,000$ mortgage which is almost my entire paycheck if I had no tenants...

Thanks!

[Scott E.]

Excellent post by @Randall Alan above. But there is yet another issue with your thought process - Fannie Mae won't allow boarder income (aka income from roommates).

You're looking at buying a single family home with a basement. Meaning the income from renting those rooms would be considered boarder income. Meaning that the income would not be qualifying income, regardless of whether they already live in the property.

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My 2 cents is that you should try to stay in the "A" neighborhood, but get in at a lower price point.